Case: Ameritrade --- Questions

1) What factors should Ameritrade management consider when evaluating the proposed

advertising program and technology upgrades?

2) According to the Capital Asset Pricing Model (CAPM), what is the cost of capital for Ameritrade?

Present and justify your estimates of the asset beta, the risk-free rate, and the market risk

premium. Note that Ameritrade does not have an equity beta estimate as the firm has been

publicly traded for only a short period of time. What comparable firms do you use in this case?

What are their asset betas?